flybe named best short-haul airline at travel awards

flybe was named the best short haul airline at the 2011 Business Travel Awards for the second consecutive year (BBC, 25-Jan-2011). flybe stated it was in recognition of its "value pricing" and customer service. The airline is also shortlisted in the top five for best airline worldwide, alongside BritishAirways, Lufthansa, QatarAirways and Virgin Atlantic.

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Pilot strikes at Lufthansa. Again. A strike ballot among British Airways cabin crew. A guilty verdict for Air France workers who assaulted an executive during a union protest. These were all headlines in late Nov-2016, following Air France pilot and cabin crew strikes in summer 2016. Labour relations at Europe's three biggest legacy airline groups are an ongoing challenge.

A CAPA report in Jun-2016 highlighted the growing number of articles on CAPA's website mentioning the word 'strike'. It raised the possibility that if the rate continued through the year, 2016 could be the biggest year for strike-related articles since before the global financial crisis. With a little under a month still to go, this year has already comfortably passed this milestone.

To a large extent labour unrest grows as airline industry profits increase. However, rather than hoping for an industry downturn to reverse the rise in the cycle of strikes, airline CEOs are talking tough – a line long taken by IAG's Willie Walsh. Lufthansa's Carsten Spohr has said that taking on the pilots is "about the future of Lufthansa", noting that it has “no chance of survival" if it gives in to pay demands (Bloomberg, 24-Nov-2016).

IAG's Capital Markets Day on 4-Nov-2016 was the first since its formation in 2011 when it lowered any of its medium term financial targets. It cut its 2016-2020 average EBITDAR goal, in spite of adding in Aer Lingus for the first time. This followed two cuts to 2016 operating profit guidance during the course of this year, as a result of "a tough operating environment". It has been hit by adverse currency movements, mainly resulting from the UK's Brexit vote, in addition to ATC strikes and terrorist events.

To its credit, IAG has responded to the more challenging trading conditions by lowering its planned capacity growth and capital expenditure during its 2016-2020 strategic plan. These steps are necessary if it is to have a chance of meeting its ambitious goal to sustain a 15% return on invested capital. This target is unchanged, despite the lower profit outlook.

In 3Q2016, IAG's rolling four quarter return on capital fell, after rising more or less continuously since it began to target this measure in 2013. It has consistently been more profitable than either of its two main European legacy airline group rivals (Air France-KLM and Lufthansa). Nevertheless, the downward step highlights the challenge in meeting its own demanding target.